Leveraging the Levy

Leveraging the Levy

Leveraging the Levy 1000 665 academii.co.uk
Globally, we’re dealing with an $8.5 trillion dollar skills problem. Are apprenticeships the answer to giving people the tools they need to succeed in the jobs of tomorrow, or should we be focussing on lifelong skills and the traits employers need?

An extensive report from Korn Ferry states that by 2030, more than 85 million jobs globally could go unfilled because there aren’t enough skilled people to take them[1]. We desperately need to start tackling the skills crisis by listening to employers about what they need and supporting employees to develop the knowledge and confidence to thrive.In this blog we have some thoughts about why the current apprenticeship model is no longer viable and some suggestions for UK government to think about.

In this blog we have some thoughts about why the current apprenticeship model is no longer viable and some suggestions for UK government to think about.

So, there’s a big pot of money for employers and employees to take advantage of – companies get a pipeline of skilled staff and workers learn on the job whilst gaining experience and qualifications. Brilliant, what’s not to love?

Apprenticeships normally take shape in the form of practical, on-the-job training alongside existing staff with an element of study. Typically, the qualification can take anywhere between 1 to 4 years to complete and can be studied from Foundation (Level 2) to Degree (Level 6). Learn while you earn. Sounds great, right?

There has been a huge push on apprenticeships with any employer with a wage bill over £3m paying 0.5% of their salaried cost as a ‘levy’ or tax known as the Apprenticeship Levy. So, there’s a big pot of money for employers and employees to take advantage of – companies get a pipeline of skilled staff and workers learn on the job whilst gaining experience and qualifications. Brilliant, what’s not to love?

It has been widely reported that in 2020, £2bn of levy funding went unspent by UK employers[2]. Levy funding must be spent within two years otherwise it’s returned to the UK treasury. According to a report in The Times, as of January 2022, almost half of firms subject to the apprenticeship levy have returned unspent apprenticeship levy funding to the Treasury. Also in the same report, it is stated that only one in six companies believe that the apprenticeship levy system is working well, according to a survey of 500 HR professionals[3].

The main reason why the levy doesn’t work is the 20% off the job training requirement. With skilled staff in short supply, how can organisations run with 20% of its manpower taken away? For many, it’s far cheaper to pay as a tax than lose 20% of your employees’ hours.

We’ve been working with a UK-based company employing more than 2,600 temporary and contracted staff. In the last three years, eight colleagues have been on an apprenticeship framework, six on Level 3 and two on Level 5. Of this learner group one withdrew as they felt the paperwork was overwhelming, another because they felt the style of learning wasn’t appropriate and four passed their Level 3. This experience, albeit modest, is perhaps an example where one size doesn’t fit all and highlights the fact that people have very different needs and requirements to learn effectively.

It’s not just the learner who has a pile of administration to undertake their apprenticeship, but the employer has to jump through a few hoops too. Employers need to dedicate time to find a reliable apprenticeship provider plus dedicate existing colleagues to spend time with and supervise the employee.

Furthermore, in the UK, thousands of people are recruited into entry level roles every day, many of whom possess very few or no qualifications at all. This means even at Level 2, apprenticeships are inaccessible for many thousands of people, leaving them underserved with fewer opportunities to progress. Often this means the organisation misses out of the potential offered by these workers, so they continue to spend more money on the recruitment churn, instead of nurturing talent from within.

Big businesses are calling for the UK government to reform the current apprenticeship model. Tesco wants the government to take action and increase flexibility for businesses to make better use of the funds by allowing them to use the funding for more tailored training and short courses.[4]

More flexibility with levy funding could also see it used for core skills development and pre-employment training, making it more accessible to those with fewer qualifications but an appetite to learn and progress.

Providing on-demand, flexible and relevant training to an underserved and undervalued workforce is key. Engaging content for an audience that want to learn but are currently overlooked for those opportunities due to lack of formal qualifications will empower people to learn and develop.

Offering eLearning in a self-paced environment, drawing down on this levy (should legislation change to allow that) would be a far more effective use of funding and would ultimately be more beneficial to the learner. In addition, as we’ve already mentioned, apprenticeships are quite lengthy whilst the needs of organisations are more dynamic, so agility and on-demand training is critical as industry and organisations continue to evolve.

At Academii, we’re committed to equipping the blue-collar workforce of today with the skills needed to excel in their current and future jobs. We’re calling on the government to listen to the needs of employers, providing a more flexible, dynamic, digital and accessible model of learning for the greater benefit of all.

1. https://www.kornferry.com/insights/this-week-in-leadership/talent-crunch-future-of-work

2. https://www.ft.com/content/e1b41e13-1001-4114-a941-4aac45249897

3. https://www.kornfhttps://www.thetimes.co.uk/article/half-of-firms-return-unspent-apprenticeship-levy-funds-to-treasury-hzpt2c2df

4. http://www.fruitnet.com/fpj/article/186196/tesco-calls-for-apprenticeship-levy-reform